This is an extremely detailed series of posts that applies not only to First Home Buyers, but also to existing home-owners. The point is to cover the most major expenses and how to make sure that your mutilation powers are at their highest with all of them. You want details? Read these!
Saving On Gift Giving:
What better Christmas Post than one that teaches you how to mutilate your mortgage by saving on gifts!?
Now then, to start with I want to set one thing straight: “saving on gifts” is NOT the same as being a stingy, lame gift giver!
It is often the case that when you suggest “spending less on gifts” the world will instantly villainize you and assume you’re just being a cheap bastard. When you’re stingy and cheap you give presents that are normally the cheapest plastic like thing you can find. They are presents that take at most 10 seconds to find and ones that usually either break quickly, or are just never used because the person receiving them doesn’t care for the item (mainly because you haven’t given it much thought).
A generic, plastic toy truck for little 6 month old Tiffany? How… umm… thoughtful of you…
What I’m going to be talking about here is how to not only save on giving your gifts, but how to give BETTER gifts whilst saving money because, like so many things in life, the more effort you put into a gift, the less likely it is going to cost you more money. Obviously Christmas is the biggest gift buying time of the year so I will be covering this first. There are however a lot of other gift giving occasions that quickly build up to a fair amount each year such as:
- Mothers Day
- Fathers Day
- House Warmings
All these occasions come under the broad (expense) heading of giving “Gifts” and can easily equate to many thousands of dollars every year. Now this money is something most people (myself included) are happy to spend as there are many people to thank and many things to celebrate, but all can be optimized and researched so that you get as much bang for your buck as possible.
Do you have a big family? Does that big family have partners? Do those family members and partners have children? It all adds up. Even 3 brothers and sisters scales to 6 when you include partners and then maybe even 12 when they each have 2 children… then there’s your parents, your partners parents, your partners side of the family (another 12 maybe?). We’re already at 12 + 12 + 2 + 2 = 28 people… then there’s your partner as well and maybe even your OWN children! Then again you might be an only child and have no partner… in which case your Christmas will be a scant 2 other people (your parents). However for most Christmas is a BIG deal and is accompanied with a BIG number of presents to buy. So how do you cut down and save on gift giving when there’s maybe 30 gifts to give? To start with a number of families often save by embracing the idea of Kris Kringle (KK), also called “Secret Santa”. Rather than spend maybe $20 on 4 siblings and 4 partners ($20 * 8 = $160) you can all simply spend $20 on 1 gift, randomly and/or secretively give it and only receive 1 gift, costing only $20. Another easy solution is to simply stop gift giving at Christmas for adults (usually at the age of around 18 or so). With this option only children get given gifts and adults simply come together and celebrate the holidays rather than having to waste hundreds of dollars on buying things that are more often than not unnecessary. Some frown on this option though as it means they don’t get as many presents, however ever since cutting right back on just buying things in general I must say, I’m quite a fan of it.
Just like setting a budget for your general expenses and mortgage help to visualize and manage your money spending, so too does creating a Christmas List with appropriate spending limits. What those limits are of course depend on you and maybe even your family and how much emphasis they place on gifts and money spent. A good lot of people believe that more money = a better gift. They also assume that if you DON’T spend (say) $50 on a gift that you’re a cheap skate. However few make the connection that this specific price is relative depending on your views. $50 could be a LOT of money to you and thus a gift of this value would be seen as an extraordinary show of good will (assuming it was something you knew cost $50). On the complete opposite side, $50 might be the amount of money you tip the door guy at your apartment building, so if you got a gift of equal value, you’d probably think that person was a stingy bum.
The cost of a gift is a specific amount. So who’s to say this amount is “enough”?
The main trouble with this concept is that everyone (including siblings that grew up under the same roof and were exposed to the same parental views) has a different level of what constitutes an “expensive gift”. Usually there is also no way of finding out what this amount is! So you’re left guessing…
Is $40 too much? Is it too little? What will Jim think if I ONLY spend $40 on him!? Maybe I should just buy him something else just to be safe… I wouldn’t want to look stingy…
The next time there’s a discussion regarding what is a “good” amount of money to spend on a Christmas gift, take the opportunity to suggest a SERIOUS reduction. Does your family regularly give $50 gifts? Try suggesting $10 as a limit. There will be the inevitable rebuttal of “no that’s not enough” or “don’t be cheap!” but the point it to start to discus presents that are not just cheaper, but better for the person receiving them and better for the environment. You can also choose to argue that perhaps YOU think $50 is “being cheap” and ask why THEY don’t want to spend more? Obviously this isn’t something you’d want to promote, but it may help them realise that there is no “proper” amount and thinking that $10 is cheap is no different to thinking $50 is cheap… so why not just set it nice and low and focus more on Christmas itself than on wasting money.
The secret of giving good gifts isn’t how much you spend, it’s how much effort you put into thinking it up. In fact, due to everyone ELSE spending hoards of money buying every thing they see and hear of your meaningful, well thought out and higher effort present will likely steal the show even though you’ve spent far less. When thinking of gifts to give try and leverage your unique skills to give yourself an advantage. Are you great with cars? How about giving the persons car a full service, check up, tune up, wash and clean inside and out? I sure as hell would prefer that over another t-shirt (as I already have dozens of them). It should mostly cost you nothing to do, meaning it’s far cheaper, will give the person much more satisfaction, be better for the environment and you’ll more than likely find it fun if it’s a hobby of yours too. Can you build websites, fix PC’s, clean, garden, Photoshop or do other generally useful things? Put them to use! Restore an old photo and colourize it then blow it up for an awesome gift that will surely bring back fond memories. Saving on gift giving doesn’t mean being cheap. It means thinking more about what the person would like to receive, planning something meaningful in advance and assigning yourself the time to do it. The result is often a unique and highly special present and everyone wins.
After a few Christmas’ together now DW and I find it quite handy to simply knock up a quick Google Document with everyone’s name on it, a list of gift ideas and a budgeted price. This is easily accessible while you’re shopping, can be edited anywhere when an idea strikes and keeps a good tab of who’s bought what and for how much making sure we don’t go nuts.
Easter can also be another time in the year that adds up quickly. Chocolate isn’t that cheap, especially if you’re buying very expensive boxed chocolates that are often a few hundred grams for $10 or $20 (as opposed to a normal 200g block of Cadbury for around $3). One good result of this holiday though is that most adults prefer not to receive lots of chocolate. They’re likely either on a diet, or know they will have to be on one AFTER Easter due to all the gorging. As a result, try and convince all adults to stop giving any Easter gifts.
“But I LOVE my chocolate!” you say…
As do I. But I’ve found that even without ANY Easter gifts given to me, there is still always more than enough chocolate going around during the week or two. People wanting to get rid of the masses of chocolate they’ve been given (so that they don’t eat it all themselves), the general free stuff that’s given out at clubs or shops and also the left overs from gifts we buy are more than enough. Once again, Easter should be a time for coming together and enjoying everyone’s company (with a little bit of chocolate), not spent buying hundreds of dollars worth of specially shaped cocoa and milk for every person you can see.
Try and pioneer a strict “no adult Easter gift” policy and only buy chocolates for kids. If you have a number of kids, a great idea is to buy a bunch of different, smaller chocolate eggs from a more “bulk item” store, open them all up, mix them together and divvy them up between however many children there are. Once you’ve got each child’s allotment, use a square of cellophane (coloured or see-through) and wrap them up with a ribbon around the top. These once again take more time and care than simply going into a store and throwing money down on the table, but they look better, give a better present (as the child gets heaps of different chocolates not just one), ends up cheaper and so everyone ends up winning.
Birthday’s, like Christmas gifts, can often be far better when seriously thought about before hand. Giving a lot of consideration to a gift and then implementing it takes time and care which always shows when you finally do give the person their present. The more time and care you put in, the less likely it is that it’s going to cost you large sums of money.
For our group of friends we have over time developed a fantastic “$15 per person” limit. This means that a couple would contribute $30 and if someone is willing to do a bit of jiggery pokery and organise many friends together a more expensive gift can be purchased. This idea of a set limit helps to stop everyone from worrying whether or not they’ve “bought enough” or “bought too little” and at the same time sets a cap that’s agreed upon by everyone in the group. I personally can’t remember how the exact $15/person figure came to be accepted but regardless everyone seems quite happy with the rule, if only to avoid the “is $40 too much?” situation mentioned above.
The other side of birthdays is when your partner has one. Do you spend hundreds of dollars on them? Do you buy them nothing? Do you spend $30?
DW and I have for the most part disregarded spending huge sums of money on each other over the years, more so in the past few once we wised up to the fact that if I spend $500 on her… half of that money is basically hers ANYWAY… so I’m spending HER money on her… not really that fantastic huh? Instead, we now focus on doing fun, unique and special things for each other. There is normally some small amount of spending, but it’s mostly just something little, the main present is the often multi-day long spoiling. Yup, Birthday privileges get extended in our house for multiple days. This was a brilliant concept I first heard of from Mrs Money Mustache and it makes the whole event way better than any single, store bought present could.
In the MMM family, we celebrate birthdays for at least a week, because well… why not?
So what are “Birthday Privileges” you ask? Well I’m sure you’ll no doubt come up with different rules, but it mostly means the Birthday man or woman can do or demand what EVER they want. Want to override the dinner plans for that night? Done. Don’t feel like doing any choirs? No problems. Want to do something you know your partner isn’t that big a fan of? Not a problem. This ULTIMATE power is obviously 100%, completely untouchable by the non birthday partner on the actual Birthday, however the powers extend over the lead up days as well as the days after the Birthday date too, just to a lesser extent. These birthday privileges are essentially a rip off from the Martin and Molloy skit “The Birthday Boy” (contains explicit language) but are fantastic, cost nothing and are again better for the environment.
Mothers Day and Fathers Day:
You know what Mothers/Fathers Day is about? It’s about being with your Mother or Father and thanking them. Which do you think will show them how much you care more:
- A soulless, plastic trinket made by a greedy corporation and pre-packaged to make it clear that you’re substituting money for thoughtfulness.
- A genuine show of kindness that is specifically catered to their unique likes and needs that takes up your time and effort, making it clear just how much you appreciate all they’ve done.
OK… so maybe those two options aren’t the most unbiased ones in the world… but hopefully the point got through. Saving money on gifts naturally forces you to put more of your own, personal effort into thinking up the idea, executing it and thus produces a far superior, unique result. I don’t think any one can argue that when a mother or father receives a gift on their special day that it should be as special and unique as possible. Forcing yourself to spend as little as possible on their gift will almost guarantee that it will be more special and meaningful. I’m not saying be cheap and buy your father a single pair of socks for $2 and declare yourself done, sit down a few weeks before the day and give good thought to what he likes, what he enjoys, how you could make his life happier. Are there any problems he’s currently having? Does he need help building something? Would he enjoy not having to mow the lawn for the next year? Could you build him a wine rack in the house? Are you able to do a task that he’s been dreading doing for months?
Figure out what it is you can do to get right to the heart of what these days are meant to be, thanking them. Leave plastic store bought crap out of it.
Usually there’s only one Anniversary for a couple, either for the day they met/started going out or for the day they got married. Either way, saving on these again results in a much better overall experience (are you noticing a trend yet?).
Step 1 is normally to just set a budget. Choose a figure and both agree that you’ll both adhere to it. It gets rid of the embarrassing situation where you spend $50 on them and they spend $500 on you. If buying/receiving presents isn’t really your thing you can even make a “no gift” policy which will usually result in more unique and inventive idea’s. Another option to save is to start up a tradition of doing a certain thing every year rather than buying each other things they likely don’t really need. This might be going out to a specific restaurant, repeating the “first date” you had with each other or even just going out for a picnic in the park. Either way, spending larger and larger amounts of each others money on each other year after year will just end up with you bleeding money, and the person expecting more and more. These days are special and are meant to represent your relationship and commitment to each other, don’t ruin it by carelessly dropping $20 on a box of chocolates. Take time, plan it and show them that you care for them by giving them something truly special, not just another store bought dust collector.
Weddings, Engagement Parties, House Warmings and Graduations:
When you’re around the 30 years old age range it is statistically more likely that you’ll be attending all your friends engagement and wedding parties.
The median age at marriage for males in 2011 was 31.4 years.
The median age at marriage for females in 2011 was 29.3 years.
These are some of the most expensive and lavish parties you’ll attend in your life, often costing $5,000, $10,000, $20,000 or even more just for the reception!
They. Are. Awesome!
Saving money here though is one instance where DW and I usually throw caution to the wind I must say. Whilst I’m not a fan of throwing ever increasing amounts of money at people in the form of gifts (especially store bought ones), the simple fact that the hosts are spending SO much money on you, the guest, means it would be very unconscionable to not spend at least a similar amount in return. A present for a Wedding is also normally skewed towards a higher amount and quite often an item for the house or their “new life” so performing a personal favour or act doesn’t usually fit in.
House warmings and Graduations are usually quite few and far between, so there’s normally no need to try and save a great deal of money on them. The only thing I can suggest is to make sure it’s something the person will actually USE. The last thing someone moving into a new house wants is multiple versions of the same kitchen utensil or 7 sets of cups that don’t all fit in the cupboard.
Now THESE are gifts I can whole heartedly get behind :-) Obviously “saving” on giving a gift to charity kind of… well… negates the act of giving to charity so that idea is firmly out the window. Be aware though that charity is more than just giving money, you can volunteer for thousands of different things costing you $0.
If you DO choose to give money though I must insist that you read through the Giving 101 post on www.givewell.org. It will open your mind to how to make your precious charity money go as FAR as possible and do as much good as possible. Give Well does huge amounts of work pouring over data to find the most highly efficient and affective charities in the world and that site is well worth the visit. If you’ve ever heard someone say “oh don’t give money to X, they’ll just waste it on administration fee’s” then visit this site. That common remark is just the tip of the ice berg and normally not the main cause of charity fund wastage.
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The benefits include: 1) How to pay off your mortgage faster than 99% of people with one hour a month of work 2) How to get rid of your debt and have the freedom to spend money on the things you love, guilt free 3) Clear outline of how to setup your expenses, mortgage and general finance 4) How offset accounts work and how to get the same result without being gouged by the big banks 5) How to cut through the crap and focus on the things that truly matter when taking down a mortgage 6) How to adjust the strategy so it works for you, even if you have kids, even if you only have one income 7) How to do all of these things and maintain a normal social life (and never be cheap).